Like most consumer markets, the U.S. appliance market is sinking under the weight of the recession.
One analyst predicts U.S. appliance shipments will decline 8-9 percent in 2009.
``There is continuing weakness in the consumer sector,'' said David MacGregor, an analyst with Longbow Research of Independence, Ohio. ``The construction outlook is pretty grim as well.''
MacGregor said the appliance market can be divided into two roughly equal segments, replacement demand and discretionary demand. Replacement demand could be flat in 2009 since consumers need to replace old or failing appliances. But discretionary demand is likely to drop by double-digit percentages, MacGregor said in a telephone interview.
Appliance demand declined by an accelerating level late in 2008. U.S. major appliance shipments in October fell 13.7 percent, vs. October 2007, according to the Association of Home Appliance Manufacturers in Washington. Retail-sales volumes in the sector plunged even more, possibly 20 percent for the month, MacGregor said in a research note.
Shipments for the first 10 months of 2008 were down 8.7 percent more than the year before, AHAM said. According to MacGregor, the slide slowed as sales fell only about 5 percent in November, because of stronger-than-expected sales on black Friday, the day after Thanksgiving.
The National Association of Home Builders' forecast paints a gloomy picture. The Washington trade group expects the recession will trough in mid-2009, assuming government help.
``There is a high probability that this recession will turn out to be the longest of the postwar period, surpassing the 16-month recession in 1973-75,'' NAHB said in a recent newsletter.
New-home construction is an important component of appliance markets, and housing starts and permits in November fell 18.9 percent, NAHB said, citing a Commerce Department report.
``What we're looking at are dramatic declines to the lowest levels in home production that have been seen since the government started keeping track in 1959,'' said NAHB chief economist David Crowe in a news release.
U.S. shipment declines are borne out by sales figures for major appliance makers.
Whirlpool Corp. reported its third-quarter sales in North America declined 7 percent from the previous year, while the U.S. industry as a whole saw an 11 percent drop. The Benton Harbor, Mich., appliance giant said it expects its U.S. shipments for the full year to fall 10 percent, lower than the 6-7 percent drop it had expected. By contrast, its Latin America and Asian markets posted significant gains in shipments in the third quarter.
Whirlpool, which has a companywide cost-reduction program in place, expects restructuring expenses to total about $170 million more than its previous estimate of $100 million. Among those moves is a 300-employee layoff at its Clyde, Ohio, washing machine factory, which employs about 3,500. In November, the firm began eliminating 700 jobs at its Fort Smith, Ark., refrigerator plant, causing supplier Jarden Plastic Solutions to shut its extrusion and thermoforming facility in Fort Smith.
Electrolux AB said demand for its appliances in North America and Europe ``declined considerably in the two last weeks of November.'' That falloff is responsible, in part, for Electrolux missing its 2008 operating-income target of between 3.3 billion and 3.9 billion Swedish kronor, the company said.
Electrolux is responding to weak markets by intensifying cost-reduction efforts, and will make staff cuts of 3,000 by early 2009 that affect all global regions. The firm claims the initiative will save about SK1.1 billion a year, beginning in 2010.
Meantime, no official bidder for General Electric Co.'s appliances business has emerged since it was put on the block in May. Haier, the biggest appliance maker in China, was rumored as a potential bidder but a Reuters report said Qingdao-based Haier will not make a move until it sees a stronger U.S. market. GE Appliances had sales of $7.2 billion in 2007, making it the second-largest appliance firm in the U.S., after Whirlpool.